Even without expiration of the Bush tax cuts, those over $200,000 will be paying more taxes. The way things are structured, this will also affect wealthier retirees and the self-employed (who already pay both sides of their Medicare contribution).

The details are pretty complex (just like the rest of the Tax Code!)
http://www.foxbusiness.com/personal-finance/2012/11/19/financial-steps-to-take-now-to-prep-for-looming-tax-increases/?intcmp=fbfeatures

Not sure if I've got this right, but if people move their investments that are subject to capital gains (like stock) to tax-exempt or tax-deferred vehicles, then 2012 tax year revenues (generated by that move) may look good, but would be much less in 2013. If a lot of people sell stock, won't the stock market take an unexpected hit?

If people move investments from regular IRAs to Roth IRAs, a similar situation would develop. They might pay some taxes now due to the move to a Roth, but the regular IRAs would have been tax revenues in the future.

It doesn't mention anything about indexing these figures for COL or inflation. While we don't have high inflation now (hah! rhetorically speaking!), that could change in a few years.

I'm a little stunned by the total possible tax rate of 43+% since that doesn't include other state and/or local taxes, and sales taxes. Big cities like NY, Philadelphia, Pittsburgh have an additional sales tax on top of their states' sales taxes. Would this encourage more people to continue to flee cities ... except for the $ million+ earners?

Probably more complex stuff in there that is over my head.

Gerry Clinchy

12-02-2012, 11:12 AM

Geithner's proposal to the R's to avoid the fiscal cliff. In another article by Charles V. Payne, he mentioned that the proposed cuts to Medicare would be $400 billion. With the $400-$500 billion reduction that occurs in the ACA, that would mean close to $1 trillion in cuts to Medicare altogether. And such cuts will "help" assure the sustainability of Medicare how? I begin to suspect the idea is just to dump Medicare into the ACA in some way. Maybe the plan is to insure all those new people is by "uninsuring" Medicare recipients? That sounds "fair" ... after all, Medicare recipients are "old" and will die soon anyhow. And, after the baby boomers die off (a large group), it will be easier to handle the smaller group of elderly that will follow.

I just got my notice that my Medigap coverage will increase by 8.7% in 2013, which effectively eats up the 1.7% COLA increase in SS payments.

For those who still believe that Medicare is a "free" entitlement ... that is not the case at all. Medicare isn't "free" for retirees, except for those on Medicaid.

With Part B, Medigap & prescription coverage, retirees who do not have an employer or union program for retiree coverage, continue to pay a fair amount for health care coverage even with Medicare in place. There must be quite a good bit of $ for the insurance companies in those Advantage plans as I keep hearing a LOT of ads on TV encouraging retirees to switch to those plans.

The president’s plan calls for $1.6 trillion in tax increases, $600 billion in savings from changes in mandatory spending programs, including Medicare, and $200 billion in spending -- ranging from public works projects to help for the unemployed and struggling homeowners, administration officials said.